Hey Gang, a mate put me onto BGL a few weeks back, and after a quick deposit valuation based on inferred it was a no brainer. We are genuinely miles off a reasonable valuation for the asset and potential earnings based on todays gold price.
Using the most recently published all in sustaining cost standard (AISC) i could find, the average for large producers is USD 900 per ounce (end of 2019). This includes capital outlay and running the office. With todays gold price of ~USD 1700 per ounce, this leads to a profit of ~USD 800 per ounce, or AUD 1200 per ounce. Assuming 95% recoveries, this leads to AUD $2.5B profit on the 2.2Moz resource, even accounting for capital and opex. Assuming a 10yr mine life and average thorughput, that is $250m per annum profit.
At a P/E ratio of 10 this would equate to $3.70 per share, at a P/E of 15 it is $5.50.
I think this is a conservative AISC given the previous development/roads etc into the area, and costs are likely declining further given current deflationary inputs such as wages/oil etc, and the inflationary pressure on gold from stimulus.
Furthermore no accounting for increased resource which is likely, and no allowance for M&A to expand with all that free cashflow.
Seriously considering selling my children.
Please challenge/counter/correct, just a 10min conservative valuation here. What are your thoughts?
References below:
https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/large-gold-miners-saw-declining-costs-in-q4-19-lifting-profit-margins-57672395
https://s23.q4cdn.com/685814098/files/doc_presentations/2020/05/08/marketingMay82020.pdf
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Last
$1.69 |
Change
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Mkt cap ! $1.983B |
Open | High | Low | Value | Volume |
$1.78 | $1.78 | $1.69 | $4.994M | 2.942M |
Buyers (Bids)
No. | Vol. | Price($) |
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9 | 124954 | $1.68 |
Sellers (Offers)
Price($) | Vol. | No. |
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$1.69 | 40 | 1 |
View Market Depth
No. | Vol. | Price($) |
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9 | 124954 | 1.680 |
4 | 28869 | 1.675 |
5 | 46663 | 1.670 |
2 | 17829 | 1.665 |
3 | 25753 | 1.660 |
Price($) | Vol. | No. |
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1.685 | 40 | 1 |
1.690 | 220094 | 6 |
1.695 | 6650 | 3 |
1.700 | 34250 | 7 |
1.705 | 42172 | 4 |
Last trade - 16.10pm 03/05/2024 (20 minute delay) ? |
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Last
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Change
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Open | High | Low | Volume | ||
$1.77 | $1.77 | $1.69 | 1106934 | ||
Last updated 15.59pm 03/05/2024 ? |
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